Mobiltel - „You Lead“

Mtel LogoIn Bulgaria, the market environment in 2015 was still shaped by a weak economy and intense competition on the mobile market; the business segment in particular was negatively affected by this. Operationally, Mobiltel counteracted these challenges by focusingon value creation through up- and cross-selling and retaining premium customers. Mobiltel also strengthened its convergent basis with the purchase of Blizoo, the second-largest fixed-line operator in Bulgaria, which has been consolidated since 1 October 2015.Management also aimed to mitigate revenue pressure on profitability by way of strict cost management.

Despite significant price pressure, Mobiltel succeeded in slightly growing its mobile customer base in the year under review, largely on the back of growth in the business segment as well as the no-frills and residential contract business. As a result, its marketshare increased from 37.6% to 38.8%. The ongoing rise in the use of data led to a further increase in mobile broadband customers by 28.4% to over 319,600. Moreover, the number of smartphone customers using voice and data packages increased by approximately48% due to successful upselling. The number of fixed-line customers rose to 583,600. This was largely the result of the acquisition of Blizoo with approximately 378,000 access lines. Excluding the acquisition, access line growth of approximately 34% wasalso reported. The number of broadband customers jumped by 268,700 year-on-year. Blizoo contributed approximately 252,000 lines. In the TV business, a visible increase to 378,600 customers was reported, thereof Blizoo contributed approximately 331,000customers.

Revenues decreased year-on-year by 1.8% to EUR 364.7 mn. This was mainly attributable to the decline in monthly fee and traffic revenues. The ongoing strong price pressure in the business segment led to a significant reduction in ARPU relevant revenues.This negative development in the mobile business was only partly mitigated by the rise in ARPL relevant revenues, particularly thanks to Blizoo’s contribution in the amount of EUR 11.7 mn. Additionally, the decline was mitigated somewhat by increasedinterconnection revenues due to the larger proportion of tariffs with free minutes to national networks included.

Average monthly revenue per mobile user (ARPU) declined significantly to EUR 5.5 (2014: EUR 6.1). This was mainly stemming from price erosion as well as a higher share of business customers with a low ARPU. Average monthly revenue per access line (ARPL) fellfrom EUR 14.4 in the previous year to EUR 12.0, as a result of the increasingly larger proportion of satellite TV customers with a low ARPL. In contrast, fixed service revenues reported a rise of 42.3% to EUR 37.8 mn.